Abstract:
This study tests a strategic HRM model by examining the relationship between HR practices and
perceived firm performance in 39 software firms in China. Due to the small sample size, Partial Least
Squares modelling was used to test the hypotheses as PLS was considered to be the most appropriate
tool in explaining path modelling in small sample size. We found that the effectiveness ofHRM can
be explained by the paths from the perceived effectiveness of HR practices such as hiring and
performance appraisal. The path from HR department effectiveness was positively linked to critical
success factors, which led to perceived firm performance. Critical success factors mediate the
relationship between the effectiveness of HR practices and firm performance. Research and practical
implications will be discussed.
